DON’T OVERBUY

Several months ago, I went shopping for a digital camera, only to come home empty handed. The problem wasn’t that I couldn’t find a camera. Rather, it was that I found too many. There are hundreds of models on the market today, and I was a little overwhelmed.

A camera-savvy friend counseled me not to let the decision become overly complicated, and he offered some simple advice: Don’t spend a lot of money. Buy one that’s easy to operate. Decide how you want to use it and don’t buy more than you need. (Or if I preferred, he said, I could just borrow his for an upcoming trip.)

As I reflected on that advice, I was struck by the similarities between shopping for a camera and shopping for a transportation management system (TMS). Driven by the explosion in global trade of several years ago and the continuing relentless pressure on managers to hold down transportation costs, the market for TMS has boomed in recent years. And as the market has expanded, so have the TMS offerings. There are more vendors with more products at a wider range of prices today than ever before. But as confusing as the choices may be, there are three rules of thumb to keep in mind when buying a TMS:

  1. You don’t have to spend hundreds of thousands of dollars to get a good system.
  2. You can buy only the modules or applications you need.
  3. There are excellent hosted systems available, eliminating the need for ongoing maintenance and enhancement of in-house or purchased programs.

All the fancy add-ons aside, a good TMS should handle two basic functions: transportation execution and information management. That is, it should enable the user to do the following:

  1. Receive, revise, schedule and confirm customer order
  2. Prepare pick sheets and bills of lading
  3. Optimize loads through consolidation, shipment planning and routing
  4. Select the best carriers
  5. Tender shipments electronically
  6. Track shipments to delivery.

On the information management side, a good system should collect and compile data in ways that make it easy for users to do the following:

  1. Benchmark current rate levels against alternative schedules
  2. Model distribution networks and shipping methods, and analyze alternative shipping points and modes
  3. Review the performance of the transportation function. (The TMS should provide regular reporting on key performance indicators.)
  4. Analyze trends
  5. Map historical traffic flows
  6. Graph trends, performance and other data
  7. Rate the carriers’ performances.

As important as these may be, perhaps the most critical capability of all is freight payment. With Sarbanes-Oxley and other reporting requirements, it is essential to maintain financial integrity. By allowing experts (human or electronic) to manage contracts, audit bills, make payments, allocate charges and report the results, the client is assured of paying the correct amount, allocating accurately and receiving feedback on a timely basis.

Finally, consider “borrowing” a TMS. Be sure to look at the on-demand or hosted systems option. Virtually all the market research indicates that managers want a TMS they can understand, install quickly and easily at a reasonable cost, and add onto over time. Hosted systems fill the bill on every count. If you already depend on an LSP for your distribution, it is quite possible that they might have a TMS that would meet your needs.

Whatever route you choose to take, careful selection of a vendor is critical, particularly when freight payment is involved.

Written By: Clifford F. Lynch